Ontario businesses can take advantage of 2014 budget changes

By:
Laurie Bissonette

Laurie Bissonette, FCPA, FCA, is a partner with KPMG Enterprise. She can be reached at 705-669-2521 or lbissonette@kpmg.ca

With a federal election coming in 2015,
it’s no surprise that this year’s federal budget did not include
any significant tax breaks. Although it is largely considered to be a
“stay the course” budget, business owners in Ontario will still
be interested in some measures and tax changes in this year’s
budget, including new funding for apprentices and interns, changes to
remitting employee source deductions and investment in clean energy.

In the budget, the government pledged
more funding for apprenticeship or internship programs. Specifically,
the government announced $40 million to its Canada Accelerator and
Incubator Program over four years, with another $40 million for up to
3,000 internships in highdemand fields and $15 million a year for up
to 1,000 internships in small and medium-sized businesses.

This program is intended to help
entrepreneurs create new companies and provide mentoring and other
resources.

If your business doesn’t already have
an apprenticeship or internship program, you could consider
implementing one in light of this new announcement of more funding.

In addition to these new budget
announcements, it appears that the Canada Job Grant program to
businesses is offering up to $15,000 per person for training for an
existing or better job. This funding, announced in the 2013 federal
budget, may also be available soon.

The government also proposed to relax
the thresholds for remitting source deductions for employees’
income tax, Canada Pension Plan contributions and Employment
Insurance premiums.

You will have to remit up to twice a
month if you have average monthly withholdings of $25,000 on your
payroll, while you will have to remit up to four times a month if you
have average monthly withholdings of $100,000 on your payroll.
Previously, these thresholds were $15,000 and $50,000, respectively.

If you invest in clean energy, the
budget’s announcement of a tax reduction for certain types of clean
energy generation and energy efficiency equipment may be welcome
news. The government intends to extend the accelerated capital cost
allowance (CCA) rates to apply to certain water-current energy
equipment and equipment used to turn eligible waste fuel into gas.

Ontario business owners considering
buying or selling a business including goodwill or other intangible
assets in the near future may want to expedite the transaction or
wait until the government concludes its consultation on its new plan
to replace the current eligible capital property rules with a new CCA
class approach.

When this change is implemented, your
eligible capital property pools will be transferred to a CCA class
which could affect the tax implications of buying or selling goodwill
and other intangible assets, depending on when these rules take
effect.

As a result, under the proposed
changes, the sale of goodwill by an Ontario Canadian-controlled
private corporation could be subject to a 10 per cent or higher tax
cost than under the current eligible capital property rules.

The government intends to hold a
consultation on how it will implement this change. It’s unclear
when the new regime will be enacted.

While the federal government may be
saving most of its crowd-pleasing surprises until next year, Ontario
business owners may still be able to benefit from tax savings in this
year’s budget. Although perhaps not as noteworthy as in some
previous years, these changes could still result in a smaller tax
business bill or a reduced compliance burden for your business as you
start to consider your tax situation for 2014.

Next year, if the government balances
the budget as projected, we could see new tax incentives such as
family income splitting, increased limits on tax free savings
accounts (TFSA) and enhanced fitness tax credits.